Credit risk PrivatBank for the period from 30 September to 19 December 2016, when was carried out the nationalization, increased from 192,63 billion to 222,28 billion UAH, or by 29.65 billion. These estimates are contained in the materials Ernst&Young (EY) to analyze the need for Bank capital.
According to them, originally, as at 30 September, the Bank submitted to the Bank calculation of credit risk under the new regulations under decree No. 351 of June 30, 2016, after assessing it in 169,2 billion.
However, the results of the analysis of financial and economic activities of the Bank, conducted by EY in October-November 2016, the valuation of credit risk as of September 30 has been increased by 23.4 billion UAH – 192,63 billion.
Among the factors that increase the credit risk by 29.65 billion EY called the Bank on the eve of nationalization, December 16, a series of operations that led to the replacement of debt from LDC Suisse, Cargill Financial Services Int, JP Morgan and Commerzbank in debt Claresholm Marketing Ltd (British virgin Islands).
“The credit risk on debt to the replacement of the absent credit risk after the replacement defined by EY and the Bank at 100%”, – stated in the materials, according to which credit risk from these transactions rose by 11.93 billion.
In the opinion of the auditor, that this transaction has a number of suspicious characteristics and should be analyzed.
Another important factor was the negative effect of 8 billion UAH from the transformation of the loan portfolio of 127 billion UAH, adopted by the former management of the Bank in October-November 2016, in which credit risk for the whole portfolio was recognized in 100% of the debt, while a separate old contractors he was below 100%.
EY adds that in February 2017 service leasing portfolio (filling stations and tank farms) has worsened: interest was paid in full only a half of borrowers.
“Because of the opacity of economic activities of borrowers, the deterioration of payment discipline of borrowers belonging to a group of counterparties related to the former owners of the Bank, for the purpose of calculating needs in the capitalization of credit risk portfolio was calculated on the basis of PD (probability of default – Ed.) 100%”, – concludes the auditor.
The growth of credit risk by 4.72 billion was associated with additional provision for loans Cyprus branch, including expansion of the sample, adjustment of the borrower, based on the opacity of financial and economic activities, breaches of security over movable property which is not registered and is not burdened with adequately in Ukraine, due to doubts of the Bank’s management about the possibility to recover the Deposit.
As reported on 18 December 2016 the government on the proposal of the National Bank of Ukraine (NBU) and the shareholders of PrivatBank, the largest of which at that time was Igor Kolomoisky and Gennady Bogolyubov, decided on the nationalization of the largest in the Ukrainian market of financial institutions. The state received 100% of its capital Privat capital was increased by the amount of 116.8 billion. Obligations of the ultimate beneficial owners of the Bank was contained in a letter dated December 16, 2016, but the text has not been published.